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Dutch DSB Bank Nationalized After Bank Run By Clients
And you thought the FDIC had its hand full in the US (even though the ominous "lack" of failures this past Friday prompted many to ask whether or not the FDIC has any funds left to even take over the hundreds of upcoming bank failures). As of this morning, well-known Dutch bank DSB Bank, which gives loan to lower-income people, has been put into "curatorship" (another words for taken over by its respective central bank), after its clients staged a full-blown bank run. This is probably not good news for the former secretary of finance Gerrit Zalm, who was previously CFO of DSB and is currently CEO of ABN/AMRO.
The Netherlands' central bank said Monday it has taken control of DSB
Bank NV after clients began a run amid fears the regional lender might
collapse.
Doubts about the health of DSB, a small but well-known bank based in
the north of the country, grew since the start of October as media
reports questioned its solvency and clients began having problems
withdrawing money from their Internet accounts.
De
Nederlandsche Bank said in a statement Monday it had asked the
Amsterdam District Court to put DSB under its curatorship "because of a
large outflow of liquidity that brought the existence of DSB in danger
in the short term."
Not too unexpectedly were the bank's soothing words as recently as a week ago that it had enough capital to withstand a full blown run. Turns out it, like many of its counterparts across the Atlantic, has been lying:
DSB told critics at the start of October it had euro1.5 billion in
cash -- enough of a buffer to withstand a run on its euro4.3 billion
($6.6 billion) in deposits.
Bank accounts in the
Netherlands are insured by the government for the first euro100,000,
and the central bank said customers would be able to pull money from
their accounts using bank passes until midnight Wednesday.
Hilariousy, the Dutch Central Bank revised its optimistic statement from two weeks ago as well:
The central bank
today said the solvency of closely held DSB Bank is under
“great pressure,” revising an Oct. 1 statement that the lender
met requirements for solvency and liquidity.
Keep in mind the Netherlands has been far off the radar screen for any major financial problem hotspots, especially with recent action directed more to the east, where everyone's attention has been focused on Latvia and how it's recent bond failure and currency devaluation will impact other Scandinavian countries, most prominently Sweden. Could this be the beginning of the FDIC's troubles spilling over to Europe?
h/t Coder
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Ominous "lack" of failures = FDIC Ominous "lack" of funds to take over
I see zombies. Lots and lot's of zombies wanting us to stop thinking because it's hurting their self esteem.
FDIC is just trying to increase the number of zombies out there running up to halloween....those jokesters. clever.
Get out your money - in cash - out of the banks right now or lose it forever.
ING green again, virtual 52-week high. Nothing to see here.
They just have to run their punk mouth off when they are the weakest. The false bravado of bankers.
The zombies are doing quite well. Check out FAS, the 3x Zombie index.
One wonders at this point if and when the dow hits 10,000, whether a cnbc circle jerk will commence, under the breaking news banner?
"cnbc circle jerk" = Still rolling on the floor laughing.
Hopefully one of the "Money Honey's" gets to eat the cracker...wonder which one it will be...!
-Michael
FDIC has already stated that the insurance fund is depleted.
http://www.fdic.gov/deposit/insurance/prepay/index.html
link to WSJ article
Wellink (Prez CB Netherlands) just said that losses could reach EUR 3.5bn, on a balance total ultimo 08 of around EUR 7.8bn. Eat that!
DSB was called the Tokkie Bank here, the equivalent of your white trailer trash. The bank was brought down by Pieter Lakeman, who called on all savers 2 weeks ago to withdraw their funds from the bank in order to accomplish Chapter 11, and make it easier that way to reach compromise with mortgage- and policy holders of the bank who were fucked royally the past 10 years. Opinions are varied on the demise, but at least here there is joy, because Wellink (arguably the worst Dutch CB prez ever) wants a second term and nothing and nobody seemed able to stop him. Hopefully this puts any debate to rest, but knowing Dutch politics you can't be sure until the end. By the way, Wellink was one of the drafters of Basel-II.
Tokkie? Ha!
So, since there is no FDIC, is it possible that ING and the rest may be on the hook for that $7.8b Euros?
Like it was already commented, ING is up in trading.
"While ING has negligible direct exposure to DSB, it is a contributor to the Dutch Deposit Guarantee Scheme. Under the scheme, savings and deposits at Dutch banks are guaranteed up to an amount of EUR 100.000 per customer.
In the event of a bank failure, the other banks together cover the amount needed after assets and liabilities are netted.
At this stage it is too early to give an estimate of this indirect exposure."
http://finance.yahoo.com/marketupdate/inplay#fast
Great additional color on the story!
The Dutch central bank can always give DSB tullips to circulate, I hear there was a banner year...
Savers with up to €100,000 in the bank will be able to get their money back under the deposit guarantee scheme. But some 4,000 people with more than that in the bank will likely lose the rest of their savings. And some 4,000 people with subordinated deposits, which earned interest of around 6.5%, are not covered by the guarantee scheme at all.
http://www.dutchnews.nl/news/archives/2009/10/dsb_bank_in_hands_of_admin...
This run on DSB has been triggered by products they sold in the past with huge profits for the bank and sales people (sometimes more than 80% of the products value went to these commissions). No other bank in the Netherlands is interested in taking over the DSB business, as consumers are lining up for huge claims against the bank.
The role of Dutch central bank is more than questionable indeed.
As the Greek captain said when his boat started sinking "Don't worry, I am very experienced in shipwrecking".
Wellink can say the same thing with regard to failed banks and almost failed banks, not to mention oversight of the pension industry, also under his remand. He has done n.o.t.h.i.n.g. right during his tenure but he is a member of the (almost always ruling) CDA party. In the Netherlands, that means that you are nearly bulletproofed with regard to failed oversight.
these fuckers should get there faces ripped off!
I particularly liked an analogy I saw here over the weekend, that of a rocketship trying to achieve escape velocity. This rocket is running out of fuel so where to look? Financials by in large have had the benefit of toxic assets that when marked up give fantabulous second derivative improvements. So thats the game we're playing again as we look to banks to lead us higher in this earnings season.
But hark, a bank run in Europe. And all of a sudden Kenneth Rogoff's prediction of a wave of soverign defaults (his conclusion in a study of 800 years of soverign defaults) seems much more likely. There is nothing that destroys banks and supercharges deflation like a soverign default. This episode should serve as a reminder to us all that Europe (EU and outside EU) is the most likely place we'll see a systemically important default, with the stronger Euro putting a thumb decidedly on the scale of deflation.
http://www.publicpolicy.umd.edu/news/This_Time_Is_Different_04_16_2008%2...
Maybe, but I have never seen an appreciating currency collapse. The nderlying economy might collapse, something known as the Dutch disease by the way, but that is another matter.
The Dutch guilder was replaced by the EUR, linked to the Deutschmark, at a too low rate by the way, igniting inflation in the early 2000's, so we could stay competitive. Yeah right.
Anyway, with the USd cratering against the EUR and the EUR not yet at new highs versus gold, souvereign default is some time away. I am aware of the problems in the EU zone and the exposure to Eastern and Southern Europe, but as of yet nothing trumps the fucked up USD.
yea i tend to agree with this outlook. in a few decades, I think we'll end up calling this episode, "the great bankruptcy"
Holland has "regional lenders"? The country is the size of a walk-in closet.
Yes, but have you checked out the plumbing?
Yes it is a small country (I am dutch)
Almost all banking is controlled by ING, ABN-AMRO and RABO
I don't live anymore in Holland, but if would live there I would put my money in RABO. Triple A and in top five of safest banks worldwide.
What should be mentioned as well, in order to complete the picture, is the role played in the demise of this lousy bank by poster Orca, who consistently predicted its collapse on an infamous discussion board called the 'dft daily discussion board' and thus contributed to the swift cleansing of our system of a piece of subprime rubbish. Hats off please.
The ING a to big to fail bank but unfortunately for us Dutchies to big to safe as well, has this saturday (finally) been the subject of some decent journalism on primetime tv. The ING has cost us taxpayers 45 billion Euro's, in gifts, guarantees etc. Here is part 1 of 4. http://www.youtube.com/watch?v=-cVI0-j1ZQg (Unfortunately in Dutch). It's called afrekenen met de ING. Wich is a pretty harsh title because 'afrekenen' means both paying and ending a problem.... Then we also have the RABO bank, a bank you might know for receiving quite some AIG dollars. They don't have to open their books that much since it's shares are'nt listed on any stockexchange. Still it is rumored to be in lot's of trouble, much exposure to Eastern Europe, Ireland and also to the Dutch housing market wich is still near it's (bubble) top. Since the DSB has many subprime loans on its books this this is no good news.
A other nice sign on the wall is that 31% of the Dutch population does'nt think his or her bank is safe (up from 22% this spring). Bankruns in the future remain an option. Now dont go to ING Direct and withdraw your savings ;)!
What should be mentioned as well, in order to complete the picture, is the role played in the demise of this lousy bank by poster Orca, who consistently predicted its collapse on an infamous discussion board called the 'dft daily discussion board' and thus contributed to the swift cleansing of our system of a piece of subprime rubbish. Hats off please.
Hahaha! Who the fuck is this?
The clue is in the last but four words of the post. :)
The clue is in the word 'subprime'...
A, Sub!
I don't know about you guys, but I'm feeling a lot better now that Larry Summers has indicated we are pretty much out of the woods and recovering.
phew, i was worried a bit before that.
I also heard a rumor that Tim Geithner is going to make a breaking news type of announcement that the US Government supports a "strong" dollar. Thank goodness.
dh, you, for one, might appreciate cornel west's recounting of his run-in with fat larry at harvard:
http://bit.ly/3wpN5U
highly entertaining to say the least.
Christine Lagarde must be dancing for joy right now. After all, what would French finance be without derision of the BeneLux. In Germany where their central bank has just won total control, I have to think this may well be a rolaids moment as they consider Hypo, Commerzbank and the Landesbanks. Of course, in the UK & US this will be hailed as not only a "we told you so" moment as to why the populace must be spoon fed carefully measured dollops of Gerber, but of the risks associated with sharing information on week banks.
So, now that Sweden has been chosen to make the excursion into negative interest rates Holland gets nominated to absorb a run on its trailer trash all in the name on injecting a bit of fear into politicians and joy into most central bankers. This makes me wonder what Wellink did to piss everyone else off, besides being BeneLux that is.
Do you have a day?
Under Wellink's reign the following things occurred:
1. VanderHoop Bank went bust, already years before the big crisis. Wellink knew it was in grave trouble, knew too that the CEO had serious issues and was unable to function (alcoholic problems) appointed a "secret curator" and allowed the bank to keep collecting funds, but that gamble failed.
2. Abn Amro. He knew their balance sheet (and off-balance obligations) was very weak but did nothing to stop the take-over by Fortis, RBS and Santander.
3. Icesave. He agreed to a EUR 500m limit on deposit taking, saw it balloon to EUR 2bn but later claimed he was not in a position to take action.
4. Fortis. After the take-over the new combination wuickly ran into trouble. He engineered a rescue, backtracked on it and finally took over the bank.
5. ING. Same shit, he knew their on- and off-balance obligations were enormous, did nothing, and the Dutch state was forced to inject gigantic amounts of liquidity and guarantee even more offal.
6. DSB, as just mentioned, same path as with Fortis, one week ago confidently claimed everything was allright, then said nothing for one week, tried to force the bank into Chapter 11 last night, failed even in that regard, and after some machinations managed to get his way this morning.
So that is Mr. Nout Wellink for you. He has not accepted any responsibility for his failures and wants ("deserves") a second term.
Heck, I am under the impression that with a resume like that he could be nominated to run the ECB. After all, Ben Bernanke said; we were in the great moderation, that sub-prime was contained, that the biggest threat to the US in 2007 was inflation, that he had no power for Lehman, had power for AIG/C/BAC/WFC/JPM/GS/MS/FNM/FRE and a whole host of insurance companies, must keep his work secret to avoid manipulation by politicians so to maintain its posture as a private institution that serves the interests of its member institutions and so on. No, I was thinking along the lines of refusing to play the ABS for treasuries swap game with the US Fed or some such thing... All the things you mention would earn Wellink a Nobel of he were running the federal reserve here in the US.
Cheers.
Note that that is only the banking part of his failures. He, and 2000 bureaucrats at the Dutch CB, are also responsible for oversight of the pension- and insurance industries.
With regard to insurance AIG-esque happenings took place, so that is not very interesting.
However, on the pension front he presided over the biggest losses (both absolute and relative) ever to rock that industry in the Netherlands. The biggest funds took haircuts of 50%, implying massive mis-allocation of capital, since Dutch state-bonds (equivalent to your Treasuries) rose enormously. Still, overall those funds, among the biggest pensionfunds worldwide, managed to piss away 50% of their capital in little over 2 years.
He was responsible. I know he can't cover everything, but he should have picked up the warning signals by September 2008 at the latest, and he didn't.
AEG up to new 52-week high. After all, they never needed that state bailout... (someone please explain how if they never needed it, why can't they pay it back today?)
AMSTERDAM, Sept 24 (Reuters) - Dutch insurer Aegon NV (AEGN.AS) did not need 3 billion euros in state aid to survive and plans to pay the money back to the government as soon as possible, its chief executive was quoted as saying on Thursday.
"Nobody knew what was going to happen after the fall of Lehman. We wanted to be cautious," Aegon CEO Alex Wynaendts told the Financieele Dagblad newspaper.
Aegon (AEG.N) has already indicated that it plans to pay back 1 billion euros by December. Wynaendts told the newspaper that the rest would be paid off "as quickly as possible" within the three year timeframe for the capital injection.
Oh, but they needed it, for sure, whatever they say now. They can't pay it all back now since it would imperil their ratio's, and they probably can't borrow it all, so they are playing it soundly. Do not believe anything coming out of the financial complex.
I am long on Aegon, mostly synthetic through December 2012 positions, but also the stock itself. No illusions tough, 50/50 that I'll get fucked on these positions, but I think I have an edge on this sucker.